Nama to offer loans to mostly foreign investors

The National Asset Management Agency is to offer loans to mostly foreign investors to buy properties in Ireland in a bid to bring life back into the Irish property market, the chief executive of the agency, Mr Brendan McDonagh has said.

Investors will have to put up 30 per cent of the asking price, but Nama will offer financing for the rest: “If the asset works out well, they’ll pay us off; if it doesn’t work out they lose their equity, but at least we get 30 per cent of the money,” he said.

“It’s about getting foreign investors back into a market that they have been shut out of for 10 years” because Irish investors outbid them in the bubble,” said Mr McDonagh, in an interview with
The Financial Timespublished today.

Meanwhile, Nama is to accelerate its plans to sell over €3 billion worth of properties it controls in the United Kingdom over the next three years – some of which are amongst the most well-known in London.

So far, Nama has put up €780 million to complete projects, including in the UK which have turned out ‘to be very profitable for us’, Mr McDonagh told
The Financial Times, including some which were sold even before they were finished.

“Rather than somebody else making a huge profit on that, we’ll fund that development to completion on the basis that we know that the people who will pay for them will be there to deliver,” he said.

Some of London’s best-known buildings are backed by debt bought by Nama, including the Citigroup tower in Canary Wharf, which was recently put up for sale, as well as the Rothschild headquarters in the City of London and Claridges hotel.

Saying that ten of the biggest 30 developers on Nama’s books will collapse because they have lost ‘the heart to roll up their sleeves and get back in and do the dirty work”, Mr McDonagh said selling in difficult times ‘requires high energy, high drive and full co-operation. Not everybody’s up for that,” he adds.

ADVERTISEMENT

Some Irish developers have decided to move to the UK to declare bankruptcy there, rather than face the 12-year Irish bankruptcy rules, but Nama will bankrupt them in Ireland anyway, the Nama chief executive warned.

Nama became the biggest lender to UK property after Royal Bank of Scotland and Lloyds when it was set up by the government to take control of approximately €77billion worth of loans to property developers, including €10 billion to buy property loans made in the UK.

Nama had been ‘shocked’ by the quality of the loan documentation provided by the Irish banks, but its decision to pay heavily-discounted prices for the loans when it took them over ‘frightened the life out of the banks’, he said.

He welcomed the Fine Gael/Labour government’s decision to scrap plans for Nama to take over property loans worth less than €20 million: “We didn’t want them in the first place, it’s an absolute relief. There were 6,000 individual customers, that was 20,000 loans. For us to do that ... it would have been a logistical nightmare.”

The majority of the ‘ghost estates’ in Ireland many of them do not involve Nama at all, Mr McDonagh declared, saying that most of them were backed by Dutch-owned ACC, part of Rabobank, and the now defunct Bank of Scotland Ireland, belonging to Lloyds Banking Group.